Detailing a trustee’s duty of accounting to beneficiaries

On behalf of Law Offices of Alice A. Salvo posted in Trust Administration on Thursday, February 16, 2017.

One of the main advantages that many often cite when extolling the benefits of trusts is the privacy that they afford. Woodland Hills residents can place estate property and assets in trusts without having them become a matter of public record. According to the American Bar Association, one can even protect the identities of his or her beneficiaries through a trust. All he or she must do is have their estates pass into trusts via their wills. Yet the privacy protections offered to a trust settlor and his or her beneficiaries may not necessarily extend to a trustee.

There is good reason for this, as the trustee has a duty of care that he or she owes to beneficiaries. Many may be under the assumption that such an accounting of trust matters is only required when it is specifically requested. However, according to the California Probate Code, trust updates must be provided to beneficiaries at least annually, as well as when a change of trustees occurs and when the trust terminates. A trust accounting should include the following information:

All receipts and disbursements of principal and income.

All of the trust’s assets and liabilities.

A record of the trustee’s compensation.

The compensation of any agents hired by the trustee.

Statements informing beneficiaries of their rights to petition the court for a review of the trustee’s actions or to make claims for breach of trust.

Regarding all financial accounts, the dates of the information provided must cover either the last complete fiscal year or since the time of the last accounting. The only exception to a trustee’s duty of accounting is if the trust instrument legally absolves him or her of it, a beneficiary waives his or her right to it, or the trust instrument was executed before July 1, 1987.

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